Canada needs a serious debate now on tax reform at all levels

Our inequity, our demography and our comparable station in the world demand it. But our current statistics, our employment situation and our complacency about our challenges resist it.

Our taxes, love them and hate them, need some fixing for our future. We haven’t taken a profound look at them in decades. As we lurch toward a federal election, and as we feel the effects of the changing of the guards at provincial and municipal levels, our community’s conversations on taxation are distorted about the central issues of how a smart tax framework creates and sustains societal fairness and competitiveness.

It was easy to witness this distortion in last week’s amended motion at Vancouver council to shift 2% – two freaking per cent – of the tax base over three years – three freaking years – to residential from commercial properties. The minor gesture made for major squawking: too much, too little, too late, too many unintended consequences. Why? Probably because the local tax regime strikes almost all parties as inappropriate in the circumstances.

But it was also easy to witness in the recent provincial tax treatment of housing, whether it involved another layer of charges on more expensive homes, or taxes on second properties in certain communities, or those on an empty dwelling in some cities or foreign-owned ones. These struck hostile chords and claims of confiscation and class warfare, or enthusiastic and gleeful summoning of vindictiveness about acquired wealth.

And this distortion was too easy to witness in this federal mandate’s ham-fisted handling of tax reforms for small businesses, a pratfall mostly straightened up before it became a fatal piece of political baggage.

Our country needs a civil discourse on how our taxes will ensure we attract capital and talent, how we finance our critical needs of infrastructure and social programming and how we are positioned globally.

Last week the Business Council of Canada released its sixth annual Total Tax Contribution survey, which examined data from 2017, a GDP growth of 3% that led the G7. The PricewaterhouseCoopers (PwC) study for the council looked at 83 large Canadian companies and found they contributed $76.8 billion to governments, up $8.5 billion from 2016 and $13 billion from 2015. That total, the council notes, exceeded what governments spent on benefits for the elderly and for children.

What the study demonstrated, and what others like it have, is the connection between healthy economies and healthy public finances. What we lack, though, is dialogue to make our economy more prone to this kind of growth through a better tax framework, so we can deal with the critical public policy challenges in an aging society, in disruption from automation and in lifting more Canadians out of poverty. The answers certainly lie more in economic growth than in tax growth.

In conversation with two of the council’s executives – CEO and president Goldy Hyder and policy vice-president Brian Kingston – it’s apparent they worry that these seemingly good times are making us self-satisfied.

We don’t routinely draw the connection between the growth of the economy and the support of social programs.

The distortion in our conversations on taxes propels the myths that any significant review would simply make businesses more profitable at the expense of labour. Hyder asserts “this isn’t a business versus labour” matter, but one of personal tax rates – “big business is worried more about their employees” – because Canada is not competitively positioned to attract and retain talent with leading-edge skills.

In case you haven’t noticed, no one’s election platform appears to be preaching the need for tax reform.

One silver lining of the minority government that polls suggest: it might be easier to collaborate with less partisanship to effect this reform.

“We’re going to continue to make the case that it’s the right move and it should be done post-election,” said Kingston.

(The conversation with Hyder and Kingston can be heard at biv.com/audio, as Episode 240 of the daily BIV podcast.) 

Kirk LaPointe is editor-in-chief of Business in Vancouver and vice-president, editorial, at Glacier Media.